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FI's liability on Indirect Loans & FCRA/FACTA
Randy Carey, BOL Guru
Guru Bios
Question: What is a financial institution's liability with regard to indirect loans and FCRA/FACTA? Specifically, if a dealer obtains a credit report without permissible purpose or does not abide by customer ID theft alerts on credit reports, what is the liability of the financial institution that buys the paper?
Answer: The bank would have no liability if a dealer was pulling credit reports on consumers without a permissible purpose. This would be a civil matter between the consumer and the dealer.
Your dealer agreement should address what is acceptable from a CIP and customer due diligence standpoint when conflicting information or alerts are contained in the credit file documentation.
As far as liability if the loan is actually made to a fictitious person? The loan will only be as good as your recourse agreement with the dealer.
First published on BankersOnline.com 1/16/06
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